Do Zoning Regulations Rob Rural Landowners' Equity?

Zoning regulations are land use control tools used to conserve resource land, limit negative externalities from high density development, and achieve agglomeration benefits from conserving large blocks of land. However, the passage of low‐density zoning is often challenged by landowners who claim that through it, they lose their land's equity due to lower land values. We investigate whether low‐density zoning impacts rural land value using arm's‐length sales in Maryland's nine Eastern Shore counties. Using both a propensity score matching method and an instrumental variable approach, we find that low‐density zoning has differentiated impacts. Resource parcels’ land values are unaffected, and non‐resource parcels’ values decrease by 20–50%.